Yesterday (Jan 02) started the first of three (3) stages in the implementation of the Custom Tariffs of Iraq.

All border crossings are now taxing up to 20% of all Luxury Goods being imported into Iraq.

What does this all mean?

This means that additional revenue is now being added to the yearly budget which will help insure yet another surplus for Iraq in 2014.

It also means that all border crossings are now linked directly with the Central Bank of Iraq for accountability which means that Iraq has taken its first real step into a Free Market Economy....Read More Link On Right

It means that the other two stages, tariffs on non-essential and essential goods will be next and the Central Bank of Iraq will need to adjust the value of their currency if they do not want to experience inflationary problems going forward. It is just logical that if they tax these goods at the border the adjustment needed in pricing once the goods reach the market place will be increased by at least the same, by 20%. It is also logical that this increase will be much higher than 20% because of all the other hands that the goods pass through just getting them to market. The point being, the Iraqi’s cannot afford that kind of change without inflation taking place. There must be a balance going forward and it is the responsibility of the Central Bank of Iraq to control inflation through Iraq’s Monetary System. The Arabic side of the CBI Website: “Proposals to amend the Central Bank Law No. (56) for the year (2004) and the Banking Law No. (94) for the year (2004) and the law of money laundering and financing of terrorism No. (93) for the year (2004) provided by the Directorates and Departments Iraqi Central Bank and the banks licensed in Iraq” Link: CBI http://cbi.iq/?pid=Home&lang=ar All of these topics, Banking Laws, Money Laundering and Financing of Terrorism No. (93) are some of the most important things that we have read about for stability and security prior to any change accruing in Iraq. With this post on the CBI Website it is obvious that the CBI is taking actions now to amend all these laws. This is why for this blog I have focus on the Tariffs and this Central Bank Law No. (56) for the year (2004) and why these are so important. The cost of goods directly reflect the value of the Iraqi dinar! Here is just a few paragraphs of this Law No. (56), that should help you understand it: COALITION PROVISIONAL AUTHORITY ORDER NUMBER 56 CENTRAL BANK LAW ……….. Acting in a manner consistent with the Report of the Secretary General to the Security Council of July 17, 2003, concerning the need for the development of Iraq and its transition from a non-transparent centrally planned economy to a market economy characterized by sustainable economic growth through the establishment of a dynamic private sector, and the need to enact institutional and legal reforms to give it effect,Having coordinated with the international financial institutions, as referenced in paragraph 8(e) of the U.N. Security Council Resolution 1483, I hereby promulgate the following: Section 1 Purpose …………. This Order establishes a safe, sound, and independent Central Bank for the purposes of achieving and maintaining domestic price stability, fostering and maintaining a stable and competitive market-based financial system, and promoting sustainable growth, employment, and prosperity in Iraq. You can read more (LINK), the reason for the CBI to be linked directly with the tariff system is simple, they control the economics of Iraq through the ability of changing the monetary system as needed. Now what is the Coalition Provisional Authority (CPA)? The Coalition Provisional Authority (CPA) was established as a transitional government following the invasion of Iraq by the United States, United Kingdom and their allies, members of the Multi-National Force – Iraq which was formed to oust the government of Saddam Hussein in 2003. Citing United Nations Security Council Resolution 1483 (2003), and the laws of war, the CPA vested itself with executive, legislative, and judicial authority over the Iraqi government from the period of the CPA's inception on 21 April 2003, until its dissolution on 28 June 2004. (LINK) These same CPA Orders apply to the Custom Tariffs as well and why we have read about them overseeing the implementation of the laws to protect Iraq’s domestic products. The reason I am bringing this all together is because how important the subject of domestic product protection and the implementation of tariffs are to the World Trade Organization when it comes to Iraq’s Full Accession. The CPA in an effort to balance the war torn economic condition of Iraq took the tariffs away in 2003 so Iraq could take advantage of the low cost of import goods due to the low purchasing power (value) of the dinar. So now you can see how important that it is that they both, implement the tariffs and give the dinar more purchasing power (value) at the same time. Quote: 2003 - CPA Order 12, amended by Order 54, suspended all tariffs, thus removing the advantage that domestic Iraqi producers had over foreign producers. (LINK) Now to have a Free Market Economy based off building the private and public sector where the locals can produce products they must take the advantage away from foreign importers, hence the implementation of the custom tariffs once again. With the fight against terrorism underway, with the help of the US and Russian militaries and the ability for Iraq to gain stability once again gives credence to the rest of the important news moving forward into 2014.

The Realist

1/4/2014 09:53:34 am

Can you tell us about the history of the market here in Erbil?

The idea of establishing a capital market here in Erbil is an old one. It goes back to year 2007 when prime minister of Iraqi Kurdistan region Nechirvan Barzani mandated us to study the possibility of establishing another market in Iraq besides Iraq Stock Exchange. Following these directions, many meetings and conferences were held with the presence of Iraq Stock Exchange and the head of Iraqi Securities Commission. A conclusion was reached implying that it is possible to establish another market besides Iraq Stock Exchange, in Erbil. A committee was formed to study this matter and it included 10 members headed by me. 3 of them were counselors at the presidency of the cabinet. There were also the representatives or general managers of the Central Bank in Erbil and Sulaimaniyah, representatives of the chambers of commerce in Iraqi Kurdistan―Erbil, Duhok and Sulaimaniyah,―a counselor of the Minister of Trade and another of the Minister of Planning.

The idea was studied and a conclusion was reached indicating that it is possible to establish another market besides Iraq Stock Exchange following the examples in other countries like Dubai and Abu Dhabi. A committee was formed and the idea was proposed to the businesses in Iraqi Kurdistan where a lot of reputable companies became stakeholders.

A joint stock company was established to be Erbil Stock Exchange,www.Ekurd.net and so it was based on a joint stock company with 10 billion Iraqi Dinars, about $8 million. The company was established and it had its Board of Directors, and I represent the presidency of the board. We started business and following the directions of the economic committee of Iraqi Kurdistan, we used consultancy services from Louis Berger Group since it worked in a lot of countries all over the world in this area, including its work with Iraq Stock Exchange. An agreement was reached and they have been working with us for 6 months now. It shall continue to provide consultancy to Erbil Stock Exchange for one year and a half more. Since we needed a system to work through, we made a deal with Nasdaq Omex to provide us with a one.

Nasdaq Omex is an internationally known company and it has about 25 markets in many countries and it has also provided systems to more than 70 countries.

So, we reached an agreement with Nasdaq Omex to provide us with a system to work through like the other international markets and since it is an advanced system, it should facilitate the operation of stock selling and buying whether to local or international companies.

We are moving on with the process and with the help of international companies like Louis Berger and Nasdaq Omex, we hope it will be ready for work by the mid of next year.

Will Erbil Stock Exchange be open to international companies to come or is it only for Iraqi companies?

The new agreement signed today related to the system provided by Nasdaq Omex will definitely facilitate companies participation whether they were local or foreign companies of those enlisted on Iraq Stock Exchange. All companies in Iraq, not only those in Erbil or other parts of Iraqi Kurdistan, will have the opportunity to be enlisted on Erbil Stock Exchange.

Probably 67-70% of those fighting there are Suni...the rese Al Queda. Thanks to Maliki, the Sunis are the one's left out of the jobs because he's Shia. Fallujah and Ramadi are Sunni towns so there's a good reason that they're throwing their toys out of the box. If this idiot Maliki isn't taken out soon, there will be total civil war between the two factions. Of course, if we had stayed and done what was needed to get the country working...we would'nt have this now.